Market Value Report in Machine Tool
Currently, most established players—OEMs, automation-device suppliers, and machine-control suppliers—are working on strategies to cope with shifting growth patterns and the resulting mix of unexpected high demand and declining growth in more mature technologies. At the same time, these players are preparing themselves to be best positioned to claim a share of the added value expected to be created by digital manufacturing solutions, which we estimate will double to €32 billion worldwide by 2025.
The disruptive trend of digitization also attracts new players to participate in the market, especially in the space of software, platforms, and application providers. This diversification challenges the foothold that established players have enjoyed on strategic control points, for example, the machine-control layer in the automation technology stack. While the strategic cornerstones are often obvious and similar across players—for instance, securing core business, capturing additional value from digitization, and increasing internal efficiency—the exact chances of success of individual strategic measures and the threat from competition remains uncertain.
Against this challenging backdrop, in our report, we explored a few areas in particular:
The sector’s status quo and key characteristics. We organize and take stock of the global machinery and industrial automation industry. The resulting overview serves as a basis for understanding why and how the industry can be expected to change.
Where the industry is heading and what the top priorities are. To this end, we turned to the players themselves: our insights are drawn from a financial analysis, a survey of players, and interviews with industry participants and experts (see sidebar, “How we derived insights for this report”).
How to navigate. We looked at ways every company in this diverse set of players can best navigate the emerging industry landscape and develop a strategy that best positions them to hold on to the value they currently claim, capture the new value being created, or do both.
Our research and analyses yielded the following key insights, which are explored in greater detail in the full report:
Growth in machinery and industrial automation varied at a granular level. By player type, revenue growth has ranged from 3.7 percent all the way to 6.7 percent, with margins trending up for some and down for others. Geographically, demand shifts in one region are affecting production in others.
Digitization is giving rise to new business models. Software development and data analytics are supporting business models that extend beyond the production and sale of hardware. Software-enabled and as-a-service business models will go from about a third of sector revenues today to more than half in the near future.
Relevance of control points is shifting and ownership is up for grabs. OEMs and system integrators own many of the key control points today. An evolving machinery and industrial automation ecosystem, however, both opens the door to players controlling them in the future and grants new strategic importance to control points that were less critical in the past.
A lack of both digital capabilities and profitable business cases are significant challenges. Machinery and industrial automation companies will need to adopt a way of working that values, enables, and encourages customer cocreation, builds capabilities (via acquisitions or partnerships) and that attracts top talent in order to capture the value of new business models.
No single path, but a clear guiding principle. The forward-looking strategy for machinery and industrial automation companies will need to consider their individual aspirations and value-chain positions. All companies, however, should focus on the most attractive opportunities that also align with their strengths and emphasize their core business.